Ex-employees claimed back-of-house staff were improperly included in tip pool

Charleston Grill forked over $50,000 to settle a lawsuit brought by two former employees who claimed they were shorted overtime pay during their time at the hotel restaurant.

The settlement was approved by U.S. District Judge Patrick Duffy on May 23.

The collective action lawsuit was first filed on Dec. 22 by Charles Knecht, and was later joined by Paul Shotts. Both men are former servers at the upscale restaurant inside the Charleston Place hotel described by Zagat as "a 'gold standard' for 'decadent', French-influenced Southern dining."

Knecht claims he was paid $2.75 per hour during a standard work week, a legal wage under the federal Fair Labor Standards Act as long as workers earn the total $7.25 per hour minimum wage after tips.

But once Knecht crossed the 40-hour-a-week line and went into overtime, he claimed he was only paid $4.12 per hour, in violation of the Fair Labor Standards Act. Under the FLSA, workers are to be paid time-and-a-half based on the full federal minimum wage of $7.25, not on the lower wage based on the employer's tip credit.

That means that his overtime wage should have been closer to $10.88 per hour, $6.76 more than what he said he was paid.

The lawsuit also alleges that the restaurant violated tip credit rules by running a mandatory tip pool that included food runners who do not come in direct contact with diners at the Charleston Grill, excluding them from valid tip pool arrangements under Department of Labor rules at the time.

On March 23, President Trump signed a $1.3 trillion omnibus spending bill that slightly amended the tip sharing provision. Back-of-house employees can now take part in tip pools, so long as all employees are paid $7.25 an hour. (The defendants were not).

Alleging that the restaurant invalidated its ability to pay Knecht and others "similarly situated" less than $7.25 an hour, the plaintiffs sought full minimum wage for all hours worked, along with compensatory and liquidated damages, and attorney's fees.

Mediation was held on May 1, according to court documents. The resulting settlements, the documents say, do not amount to an admission of any violation.

Knecht's $28,000 settlement includes $10,000 in alleged back wages, $10,000 in liquidated damages, and $8,000 in attorney's fees.

Shotts' $22,000 settlement includes $7,000 in alleged back wages, $7,000 in liquidated damages, and $8,000 in attorney's fees.

Both men were represented by Mt. Pleasant employment attorney Marybeth Mullaney, who did not immediately respond to a request for comment.

A representative for the Belmond Charleston Place hotel declined to comment.